The major protein component in the serum of the developing mammalian fetus is alpha-fetoprotein (AFP), which is synthesized in the embryonic liver and yolk sac. After birth, the rate of synthesis of AFP in liver decreases drastically to levels which are barely detectable in nonpregnant adults. Synthesis of AFP is resumed in adult liver during liver regeneration and in specific tumors such as hepatomas and teratocarcinomas. In contrast, serum albumin, which is the major serum protein synthesized by the adult liver, increases from low levels early in development, to high, relatively constant levels after birth and in adult life. These serum proteins arose in evolution as the consequence of a gene duplication, a conclusion based on a striking similarity in the organization of the coding segments of their genes in the mouse genome, and a 50% conservation of sequence homology in primary sequences. In addition, we have determined that these genes are tightly linked in tandem on chromosome 5 in mice, with the albumin gene 14 kilobase pairs of DNA upstream of the AFP gene. The synthesis and turnover of AFP and albumin mRNAs in teratocarcinoma cells and fetal liver have been shown to be regulated at the transcriptional level. Two transacting regulatory genes that affect AFP, but not albumin, transcription in developing liver have been described genetically. We are currently developing genetic and biochemical assays for the products of these regulatory genes that will allow us to isolate them and determine their mode of action. At the same time, the DNA sequences required for accurate transcription in vitro and in vivo, using DNA-mediated gene transfer, are being identified.